Luxury With Free 1-Day Shipping? Amazon Sets Its Sights on Upscale Retail
Analysts say the program reflects the struggles of high-end brands
Key Insight:
Amazon, which has made a name for itself providing easy access to a huge array of goods at hard-to-beat prices, has launched an in-app storefront with luxury brand Oscar de la Renta offering more or less the exact opposite—and promises of more to come from additional luxury fashion and beauty brands.
Inventory and pricing will be at the brands’ discretion, while Amazon will provide merchandising tools so brands can personalize content, according to a company statement.
Access is granted to U.S. Prime members by invitation, giving the program an air of exclusivity for shoppers. The ecommerce platform is also attempting to translate the typically high-touch experience of luxury retail to digital with features like 360-degree product view.
The move comes at a tough time for many retail brands, but Sucharita Kodali, vice president and principal analyst at research firm Forrester, noted that plenty of shoppers are still buying luxury brands as wealthy consumers have been far less affected by the pandemic and economic downturn.
Plus, the pandemic-era shift to digital includes luxury, especially among discerning consumers who know what they want and are familiar with the brands, Zach Weinberg, director of Gartner’s Amazon advisory group, said.
He also added that Amazon previously piloted a program with luxury brand tags and has therefore been able to gauge interest among existing customers in luxury products. (Christine Beauchamp, president of Amazon Fashion, said in a statement that the platform was “inspired by feedback from Prime members who want the ability to shop their favorite luxury brands in Amazon’s store.”)
“People buy anything on Amazon if it’s there,” Kodali said. “That is why Amazon has worked so hard to get everything.”
Meanwhile, the department stores where luxury brands have historically distributed goods—including the likes of Lord & Taylor, Neiman Marcus and Saks Fifth Avenue—are struggling. Weinberg said the Amazon partnership may come at least partially out of necessity for some luxury brands who have lost distribution channels.
“My hunch is that like the flash sale sites, companies that are dying or otherwise financially challenged will be the first ones to embrace ‘Amazon luxury,’” Kodali said. “Oscar de la Renta on Amazon would, in my opinion, be a joke. That would be like the brand being at Walmart. If Oscar de la Renta is on Amazon, I wonder if the brand will live for another five years.”
Amazon is more bullish: Beauchamp’s statement also said Amazon looks forward to “opening a new door for designers all over the world to access existing and new luxury customers.”
As Amazon has become more proactive in combating the counterfeit goods that have longed plagued its marketplace—including a recent lawsuit against an Amazon seller with fake Valentino shoes—Weinberg said these luxury stores should help Amazon reassure high-end brands it’s on their side and will protect them.
The company has long had ambitions in fashion, pre-dating even its Prime Wardrobe service and now defunct Echo Look device and its Big Style Sale this summer. It has also partnered with Vogue and nonprofit Common Threads to help connect consumers to designers.
Noting apparel is the second largest category in retail, Kodali said Amazon needs to win a big category like fashion in order to continue winning in retail, but it still isn’t a go-to site for apparel the way it is in other categories.
“That is the reason for Amazon trying to win in luxury,” she said. “I’m sure the hope is that if some high-end brands join, then other mid-tier brands will also join and help to bolster the entire offering.”
